Censored CIA-GAO Letters

COMPTROLLER GENERAL Or THE UNITED STATES
^ WASHINGTON 25

GOMP,

29 , 195 ?

lT'>:^rcu:ic Pi'.ul J. ICiliSay, Cbalrniaa
;;i)cclal Eujoo-rir^ittie, Couti'al In!;eIlii^r.Ee ‘^encj
CccToittec on Amcd C’erviceo
I-ouEc or Kcyrosontatives

K'car Chairsau:

On :try 15, 1555, 'J- PoaLuelson, Eir-ortor of o-nr Cirli Ac-

touull'.i; aac: AaOill:-,,- Eivisioa, attcr-cc-a cr. evi-C'ali've i:oeti.!;- of yavx

OG iiO C-C-d l* 0 »J^OLw L Li ^iv v-l • 5 * w.lu'^ ni#

Cciji'ti-Jii Xntclli^snca /wr^t’r.cy. lA tiie conc-iiLiiou of t-ilo i:.cat:lr.g, Xt.
\r.*.z i;Uf:;;oc;tC'<3 'clic!:- rccc;'‘',nD::ant-iorL> be L-tceiittcd I'or tlie Ir.iLve audit

Cn ' _ - » c^jci-'or;, in vicTj- Ox the pro-

vluious z-x froction 10 or Central icrtelil^.eaca Aceccy Ac'-:_, rio'
exceptions iiove beea thcsri to ar^y axper^ii-tures . Iii l-hc,;:o ca^<.;3 vncrc
rnioytioxibia jK’2't-v--rit3 cclvo to oin* r^ch-LoticJ, *,:3 reier -the cn^os to'
th^ eXA Co:rjtrollcr*3 C'fi’ice for cenrectire actios. X.: uoi;;,'; iriio

for section 10 (a) of t]-.a Act, vcitlo appear to be io^roper or
eitiicr Luider Isw or •'jneer the cecisicna of tte Cczrptroller Cetieiol.

T> 01 ^Cj,. 3 L, Uu-'.' l-ij. ^ 'L>*> ^.'j. 'OC •• j 03 ^ *00 -i 2 vvC ;-LaOO >10

uudit of C‘:vP3r4-lt'.u'e3 of ur.'-T>'ac2:.c.’x'Ci; fa-'iCS*

t1'.c- crinettiont c-f Cc;rtr:\i Xnteliipronoe 10;Ti!^lation, ve havo
i^caerally >:ar:n<lcnsd the ot 01141*1: wc rsaj^e of tte iioti*v*ities

nest Coyemraent' a^encica i Ui’.c.or oin* ccnurehciioi-te aadit ap*x:ro-a-d*>,

i;i*ture cf fitncn and the utilization of property- and peursonn^:!. In *tne
furtiicrsnee o::i 7 of nuti**orize3 pre.i^rans cr activities in aa effective,
officieii't, and ocoix®ilc:tl rnnner,- In carrying out this hind c.C an

Dudit, ve cxanine ■the oroanisaoloc structure end review the, csitdbixGhcd
figcncy policies for coruomit;? \rltli legislative intent and applicability
to agency acti\’lties. Ue edso eicanina agency practices and Tiroccdures
follc'’.ved ID carr^'-ing out the agency policies and rru:o selective e:cciu-
inationa of actual traiiaactioua as a nearjs of epproisiag tl'.e application
of Ggcucy practices and procedures. Eeports on tl'.a results of our uorh
are subnitted to the Congress and to ngenc^y iranageineat officials.

Ue ‘belicvB that a-'oroofier type of-aucit- Is- appr opriate for our
vork at Central Inte3J.igetice .Agency and is loore likely to he productive
of evaluatloiis of the ndniuistrativc fimctioas which vouid be r-eipfui
to tlio Cor.yress and the Agency Director. We have accordingly concluded
that it TOUld be desirable to ei^pacd cur audit vori: at Central intclii-
gence 'Agency ^-ore in line \/ith our regular co*.5prehensiYc cudit approach.
The sa^ianded vork would include, an exeminatica cf vouchcred ecroenditures,
and, at the outset, the controls and procedures used in processing un-
vouchered ccQcnditurss. .Mi:o we would propose to icake a limited cniuil-
natiOTi of the support for ;in7cuchez*ed expenditures in accordance with
auch. aGTCjamiit as to access as can be worked cut bctycen C.I;\ iu.d o.ix
Office, Ag ii'.dicatcd by t!:o preceding contents v;c have horotofers
c\crried out orily liiiitcd audit \rork at Cl/i, and/.'c do not halieve aucii'
limited wrk should be continued.

At this tins wa do not rocomcend an^' chaiige in section 10 of ^he
CentraJ. Intdxligcnce /-u^eac:/ A.ot. b'o beiici'a, hovevv-r, that your Ou.b-
cor.":dtteo coviLl bo vc.iy helpful in cffcctin" a chuinre in the scope, of
cur audit ^rorl; at CTh. ly cclviolizg the iVjcncy of your interest iu
broaclenlcg tho audit pczfo'.Tu:! by the General Accou.ntir.g Office. Aaiy
broaSening of o’ur audit activities should not induce aa ovaluatiou of.
the intelllgeuce activities of the Asency,

V?e are prepared to discuss this natter f'.irthor at your convenience.

Sincerely yozirs,

lOSEPH CAhT?BELL

Couptrollc-r General
of the United States

CENTRAL INTELLIGENCE AGENCY

25, D. C.

•\‘i5 '^OFFICE Of THE OIRECTOF

fj^ / j :3 ^

1 G OCr 1959

The Honorable Joseph Campbell
Tlie Comptroller General of
tlie United States
Washington 25, D.G.

/j^iwuLv-

('*3 f?

r- '. »

his i ] '

Dear Mr« Campbell:

Since we had tlie pleasure of briefing you on 30 July, we have discussed
further witli Mr, Samuelson IiOv/ die General Accounting Officers ancUt of thJ.s
Agency might be improved, 1 believe that tlie Geiicral Accciiatir.g Onice. can
expand its current: audit activitiss in a considerable por^o.ii of the Agency,
and in. moving fo.rvvard bi bus (tireciion I feel that vve should reach agreement
on certain fundamental aspects.

In the CujitraJ. Intelligence Agency Act of 1949, the Congress, reco^giLsing
some of the unique problems involvmd in the conduct of inf.elligerice activities,
provided broad autliorities over the ej^ienditiire of and acccuntirxg for Agency
funds. In particular, Section 8 of tliat Act (formerly Seeden 10) prcAdes tiiai:
expenditures for objects of a coz^iidential, extraordinary, or emergency nature
are "to be accouatsdior solely on the certiiicare of die Director and every
such certificate shall be deemed a sufficient voucher for tlie funomit ti’icreiji
certifiedo" This v/ording does not contemplate the rC'Aev/' of expenditures v.'hich
die Director certified were made for confideiitial, extraordinary, or emerg-ency
purposes.

V/liile all funds appropriated to t-he Agency are technically cn an ”un,v’Ouch,“*
ered" basis, it has been my policy and tint of ray predecessors to limit tlie ex-
ercise of tills special autiiority to Uiose activliies which in the national interest
should have the maximum security protection. To the extent possible Agency
funds^are expended under^the other provisiOijE of the Central Intelligence Ag^cy

Accoiuiting Office, Tiiis policy has been exercised to such a degree that certain
activities, not in tiiemselves sensitive but conducted solely in support of highly

confidential operations, are funded under general authorities 'v/ithout invoking
my special authority to make final accounting thoreforB A comprehensive audit
of the sort now conducted by the General Accounting Office in otlier agencies, if
applied to our so**call8d vouchcred expenditures, would necessarily reach into
tlie confidential operations which they support and which are protected by my
special authority under Section 8 of the Acto In these instances, therefore, the
comprehensive audit would have to be limited so as to remain outside the area
of sensitive security operations.

In view of the statutory background, I trust that you will agree v.lth the
position set fortli above. If you have any question I would be delighted to discuss
the subject mth you at your convenience. If we are in agreement on tliese fimda-
mental principles, I suggest that your representatives continue to explore with
my Staff the manner in '.vlucli the scope of the General Accounting Office’s audit
of the Agency may be broadened, consistent v.ath tiis security req^ilremcnts
described alx)va.

B-.1332CX)

COMPTROLLER GENERAL Or THE UNITED STATES
WASH1NGTONZ5

" October 21/ 19??

Jlonoraliic Pg-'lII J. Kilxis^,^, Chalrraan
Special £\ibc:o:nElttoe, Central Intelligence Agency
Cc'x:ittos on Areied Dorvicea
Ilo'ose of ItapresentafciYGS

Deal*

Cli^^lnnan :

CHv.iL'oelA

oi

/

COMPTROLLER GENERAL Or THE UNITED STATES
WASHINGTON 2S

B-133200 October 21 , I9J9

Konorcble Allen Dulles, Director

Central latclUsence }:j[^ g[(py ^

Doai’ lir. rnaies:

Yovjt letter tinted October l6, 195 ?, concemiss a
extension of o'or au-^lt of Central Intelllg^eacc A^acy tuv3 Deea
reviovied, aiid i-.;u!rt:ier dlsciisaiona nave been bad bettraca rerore-
et^atatl/es oi‘ this CifiCQ ancl your citoTf •

'four Inttor rotos tlio pro'oler^.a invol-ved in the

eetiv-ltiuti of tlis Cnrtral Iritf-illl.r-cr.ee /.rnrey mi -the 'bread

avitrior:lEaJ:l'tu <;ivc-'i yov. over tho of u?d accox-ntia^

for fr/u-bs. In yoxx ir.flcc.te that ta

( 2 ) Cerfeiu Kctirltiffs ecj^port o? confia£n:ilal
epeo'etions i:!X‘oteott2. by yoiu’ e.uthoi'ity ualcr
Section 3 .

V.'C cvp.'ce that to t5:e ecipr-rf.ll.vros ca*e certiflel by you as

confidcntla-l, extreordirarr/. or n?iture, eucli cxco-euflturn-s

are Eot subject to by vithout your cciLCurrcnco,

In o-Jr ccErprehensi-v^e audits, ve e-:rciino the or^^anirotioa
istruclrnw, ai*er.C 3 r policiea, ml !?.::-5ucy pract5.cc3 ar.?. procDdure.s,
to£e<iiQr with o i'luioctivo v*:;a:d.;uoi.lon of sctusl tjcanaactiona as
a tiCv'Uis of fCJprsLiaia^ the arpiicc.tloa of t?.^,e;ucy practicaa and
p.tt>cedura3 . I\c a. r-erulti cf the diGcuaelo-Tis »lth your StaiT it
secna pcQsible for the G-er.eTn'.l Accoxintin^ Office to carpand its
audit at tiic Cezrtral I:itelli^ence A^e.icy into a ccnsiderable part
of tlio Arjcncy*E c-ctlxlti-se, cv-on tuoush oxir revlcvs \X)uld be
O'atGxdo t'ne orea of scixaitlve operations. Dcsiiit-o tha

ilrltatiLi..'., '.rs h-eli-exM! oo •*. rer-ilt of the r-T/iauB ve cculc. r;.cho
that VO vouid be in li positicn to I'nlxe (?,Til.uatioa3 of a oubstcntial
part of the aclrri vd strative functienn.

'Zhe Central IntslUsnacs Agency presents protilens on eufflciea't
■breadth o? co'/era^e end review of decali for the purpose of reaching
Gound evaluations, cut vg are willing to broaden our octivitieo at
Central Intollirence Aeoncy vithin the principles expressed in your
letter. Hove-v'er, in the event it appears after a trial period that
oui’ revlcv.'s ai'c lisxited to Buch sa orl;&at that ve cannot effectively
end conotructively Gcccnpllsh aay TOrthybile objectives, vs vill b^ve
to consider vhetiier tbs audit ahould be continued.

On the bc/jis cf the cCoova, va are willing to have fiurther
diccy..'3r5ion:s vltli your r>tafr in order that the cuci't Lvjy j^i-ocveed.

bi.iicGro.iy yourij.

^0 3 p- ph Cpnnb y

COMPTFlOLl-eR GENERAL Or THE UNITED STATES
WASHINGTON ZS

MAY 1 0 l9ol

IIonorti>5lsi .y.lc3 P’-illaG, Director
Central latellignace A^enc^

Itear Itr. IXiileE:

Ch.i> General Aacoimting Office has coT^nlet.ed a roTievr of
selected overt actl-rities of tlio Central Inte^-ll.jOncc
Daned on tMs v;^ l>elic''.'a tnat lajSsr oictlns necarity

rootrictior.3 on the Oenemi Accc-.ntir^ Office audit, of CIA

l;cjnivo rovlora on a oentinnir.;^ Tensis 'vuat vould to prociuctivo
of Grvalxtatioije bnlpfiO. to t'no Con^-cDs.

/a joi n

Attsictsisat

B -133200

Ccnnitrallox* Ger.sral
of tbn Uni'ted Ste-'tss

COM?^ROI_L£R G£N£RAU OF THE UNITED STATES
WASHINGTON 2S

j . «1AY 1 G ^95]

,^olo laul J. ICildiy, Qalrmaln
special Subcocnittse, Central InteUlgaiiKia Agenejr
Coiraitt-c^ on Arnsd Gerydees
IIouso of Ecrprosentatlves

D^ar l‘j:» Chairmnt

1£>3 Cc-asral Accountlns Offica haa Eida a reviev of ealectecl Bcti7i"'
tieo of tli'3 Central Intelli.^ence (CIA) for the piirposs of dstcr-

whether tbe ucopa of tt-s r.uoit of tbo General Accounting Cffice
could lo ernand^d cuffic.lon^-;ly to mlo reasonably CDKnrehenslTs ernlm-
tiono of Cn activities that voulcl to Iiclni'ul to the Congress.

in>is xOT:.c:i- i.na rndo V'ccrcuant to the interest indlented by th-o
S;ico'.--.;;:nittc-c at a.i hvait-ng 3^:.'. Thy i95-)*

t-et-.rijen i'r;u‘3Scuv.atlVDS of tlie Accouatlrvg

and CiAj tl'c r.'ii'.jctor of Cc-ttral ^noi r.xcl vl.u CerAytrolior Geacr-iiJ.

in Oc 3T had ca aacr.an.'vc of can> ■ 'on dteo canccriHiig the nuiit s-ud

cr'.a.ation^i- Varloiv.: ’Srere aaMon by CIA to :jl'^co

Af.'c.'ov'j.iting Uffico in a po'^li-ton to a coarorv,*h-or.r.ive audit of the <j-r :vt
fict;lv-it:lc:3 of VX:\t It is cui* Tie-',/, horreverj tVint vnebr o:-ist.U'.:; socuxlc:/
reotr'ictlono on cur audit of CIA activitiee, ^ v.-> ou * ^ c

o.ccc'ce to nah'j ccc:■■re*^src3lv.>' ;:..':Vio';rs on u contintiing Ixisis ".roiuu '.;j
X^roCuctiYc of cvaiiviGionn hohifal to the Congu’eso.

Vo limited own rc d.c;? to seloctod overt activities ns uccecg to tlin ,
covert (ccni'identic.l) ^ cbn5.>:;0. u-5. Va hr/be had no

access irha'cseavci’ to tire Pirn ( nd va ciurr-ot cx To'C tively revlcv

and gvalusiu tha acti.yitics o ^ CQTrvonmb ■becauna the conlU--

dential and overt activities of « > nent are integratno. -to sur-'U an

GX'tent that ve cauuct cihe roesonaoj^" ccr::rehensivo nadito. v’e iiave bxten
£;ivun Gufllcient access fco rnlta ronsone'bly cennrehonoiva rev?.CT-r-3 of the
ovci-t uctiv.lt-ies of ti' c Xatellicvcace Csiu:onantj tut cuch roTiC'/s. in our
opinion^ vl.'Ll coi' he prodacrlve of uiunifiev-mt evaluations tecaune can-
not fcaDibjy ovai.iu;.te 'the e:-:t-cat to vdieh needed ovci-t infomation in
aviiilablc for co?-ioction or deteralno the ceeu. for tb-c intcllj.g-ence in-
forexatiou sclooted for collation end uoo in the proctnctlon of intcHlrenco
rciTorts. About 9'J jiorcers'c of the a-nunl cr^penoitures of tbe Irxt-oiligiiijCG

broad {uiidelinc^ cotabJ-Lshed by the intelligonae corminity the cpocific
Inforcaticn to b-e calicctec’^ cclLitcd^ end xusd iu the procbatlon cf
latol ligenca reports.

Eased on our revlev, >?a belleTe that (l) CIA is finajiciiis certain
Library* of Congress activities vhich subatantially transcend CIA*c in-
terest and responsibility for providing a centralized reference service
as a service of comnon concsm to the intelligence ccnnnnit^’ ond (2)
auiiuinistrative controls over CIA's covert field orgnolzation, the U.S.
Joint Publications Kesearch Service, should be strengthened* In addi-
tion, ve have cuestionsd the ai’rangeatents under vhich CIA is financing
certain nctivltiao at the Department of State-

projects at the Library of Congress, the l-bnthly Index of
Russian Accessions end tire East European Accession Index, are
being financed through the operating budgets of the Office of Central
Reference, The budget of this office includes ?6G5,000 to fin'mco
these projects in fiscal g'car 1961, Tn3 projects produce publications
vhich are pri.nai'il.y dictributed to public end private reseaz'ch organiza-
tions mi 'faDrarice in the R'nitod r>t-atch find neuy foreliT^ nations, in-
cluding DO-ee in the U.S.S.R. and ita sat-oilites. dnec-e projects, in our
cpiiUon, cu'ost'.int.ially transcend CLi*s interest and responsibility' for
pro\l.dlrg a ccatrri refereieo facility as a eervico of cenrion coaoomi to
the iritelligcnc-e cci-.nnuiity,

' Ue 'ti.'ivo bom u-ivlced by CXa t?ivt 'rausd on i\ re.-ie*!' of the Cff

thojUfoelUgcnce it has b:;ea d-'tcrrJ.ned that the tVLb'''

tion of ■the inlerjjs that CIA v:o'ald ^jn.t to contimve, and tho i.viticr iK
vjr/A'j'iV hctiV'S conrjiderstioi'v v.c e ’-hat portion of fae robateO,

coi'its should continue to T'c finaaoc-d by

Cortnin nchilixletiutive ;pr\eceu,uro'o uertinont to CIA's control over
the activities of its covert field or'ur.ij'.ation, tbu U^S. Joint 5,\0e-
Hcaticm Fiosearqh ferr'lce, should bo soreu'.ith/n.iod, \ie h.r-ive aC-
vlBod by C'L\ ti>at changes ore to be rnte vhJ.ch vilJL ctre'-egthen these
controls »

Tiro projects at tbo 33epa.rtr;ent of -ttatc, the /-aticr-al Intellj.fc;xice
Survey and Biographic XivtcH-lymce, ore being f.ln-incod by CXA through
the operating budgots of th$ Clficc of C-;;ntml I-ofcronee and the Office
of Easic Intelii genes. The buckets of the tvo offices include y^.* ^1?,C'00
to fitsnee tceee projects in Ipbl, In April X?6i, un vercs adviced hj CXA
that the Eeportn^oat of Stc-.to and CIA hirvs been ccncidarins the possibio
tronefer of thece r-eportrujat of Stats actiritioo to CIA. CIA .presently
has under consideration otbsr ;.ritters raiaed by us on these fira-r.clng
arraa 32 r;"ntG> o.nd ve vilJ. l\u:rd?'h you with a Svipplosventmg'* letter vhon
decision has been reeccad tharcon,

vorthvbile audit abjectivns cn a continuing te.sto, vre plrui to discontinue
our audit of CIA activitlea.

ifs arc pzrepared to diccusa these ratters vith you should you oo
clcsirc. ■

A copy of thlD letter is fceins sent today to the Director of Central
IntcHi-sence.

Comptroller Generril
of the united States

CENTRAL INTELLIGENCE AGENCY

. V^WASHINGTON 25. D, C.

\‘i

' OFFICE OF THE D/RECTOR

17May 1961

The. Honorable Joseph Campbell
Comptroller General of the United States
Washington 25, D.C.

Dear Mr, Campbell;

I have your letter of 16 May 1961 enclosing a copy of your letter of
the same date to tlie Honorable Paul J. Kilday v/itli regard to your reviev/
of selected activities of tJie .Central Intelligence Agency for the purpose of
determining wlietlier the scope of the audit of the General Accounting
Office could be expanded.

I wish to express my appreciation for your cooperation and under”
standing siiice our exchange of correspondence in October of 1959 wliich
formed tlie basis on which we have jointly attempted to expand GAO audit
activities in tlie Central Intelligence Agency. The reviews made by your
representatives have brought a number of matters to our attention wMch
have been helpful and on v.'hich corrective action either has been or is
being talccn .

I believe tliat over the years the audit of Agency activities by the
General A.ccounting Office has been most beneficial and regret that you
plan to discontinue it completely. Before final action is taken I should
like very much to discuss mth you tlie possibility of your continuing an
audit on some scale.

ErGHTY':!eVC.NTH CON6RCSS

J(>MH K. BI_>MOr«ftO. COU><SCL

^lup w. ■(eixi>isa, ecunta.

FRAMK M. SUkTtNSHSK, COUMBEt.

HOUSE OF REPRESENTATIVES

COMMITTEE ON ARMED SERVICES
SUITE 313. HOUSE OFFICE BUILDING

WASHINGTQN 25. D.C.

May 18, 1961

fiT.p'M-.

Honorable Joseph Cas-.pbell

Corapcrollcr General of the United States

Vt’eshington 25, D. C.

Dear Mr. Campbell;

This is v;ith reference to your letter of Kay 16 to Honorable
Paul J. KiZday, Chainr.an, SubcDsrdittee on the Central Intoliigence
Agency, Committee on Armed Ssi‘'/ices .

Hr, Kilday and I hai/e discussed the coatents of your letter
at some. lcn;;Ch and in view of the cour.se of action x.'hich you
contemplate, I feel it incurr.bent upon me to promptly eupresn uiy
judgment on this i.-.atter,

A.S you know, I'r. Kildcy's Subccc-aittee gave considerable
attention to the audit conducted by the General Accounting Office
of the Central Intelligence A.gency, It uas fully recognized that
there were certain restrictions on the scope of the audit by the
General Accounting Office, which restrictions were inherent in a
relationship of this nature. However, the Subccsnftittec v;as of the
firra opinion that even a limited audit of overt accounting actiozis
would serve a wortV.while purpose. In furtherance of that judgment,
the SubcoTTCittee concluded that the limitations vHiich were inherent
required more experienced representatives of your office than had
been assigned to this function. The Coctcittee was gratified that
you concurred in that judgiTienU and iciproved the quality of the
representatives so assigned,

I an of the fira opinion that the points which you raise in
your letter to Mr, Kilday should be the subject of further discussions
between the Cc'.tnittee, tiie. General Accounting Office, ar.d the Central

Honorable Joseph Campbell

Page IVo

Way IS, 1961

Intelligence Agency, Pending the cosipletion of those discussions,

I can not recommend too strongly against the course of action
which you propose in the final paragraph on page two of your letter,
I knov/ you must fully appreciate that there are other overriding
considerations 'which can not be divorced, under prevailing cir-
cumstances, from any change in Che existing relationship betv;ean
your office and the Central Intelligence Agency.

I trust you will agree with my firm belief that there is
nothing in this situation \;hich requires precipitous action.

On the other hand, I want to assure you that the matters set
forth in your Letter v;ill be the subject of further consideration
by Mr, Kilday’s Subcor/mittce, in full consultation v;ith your
office, at a time which* better accoTrccodates the overriding
requirements of natioiial interest.

I would appreciate a response to tliis expression of rcy views,

1/ith kiijdest regards, I am

Sincerely,

COMPTROLLER GENERAL OF THE UNITED STATES
WASHINGTON 2S

B-13320D

MAY 2 3 ISei

Honorable Carl Vinson, Chairman
Cosunittoe on Armed Services
House of Representatives

Dear Mr* Chairman:

Wa acknov/lcdoe your letter dated May IS, 1961, respondin;j to
our letter of May 16 to the Honorable Paul J. Kilday, Chairman,
Subcommittee on the Central Intelligence Agency, Committee on
Armed Services, relating to our reviews at the Central Intolligence
Agency*

V/e are mindful of the interest in our rcvlG'.vs at CIA cs expreesc-d
by Chairman Kilday and r.onbi-rs of his Subcommittee- to s r:-presenintiv9
of our Office at eo executive r=-:i?c;tirig on May 15, i>'59. Aftci- consider-
ing th^'so views 'vV& informod Chairmen Kilday by letter dated ’..ey 29;
1959, that we believed n breeder type of audit core in line with our
regular comprelu'nsive audit opproech was ropropriatc for our work at
CIA. The expanJou work would include- an examination of vouch-:rad
0 'Xpcnditur>:vsj and; at the outset, the controls and procodurc-s uSed
in proesGsinj c-xpenJitures . In eddition, ‘.ve w'ouid make an ox uicn
of tiie support for unvcuchoix' J expenditures in accoroono-: vjj.tr. suc!i
agrocmc-nt as tc access as could be arronuyd botwiMn CiA and our Office.
We also stated in this letter that hGretOiOre we had corrioJ out only
limit'-d audit work st CIA and that ws did not believe such limited
work should be continued.

Following soV'.rral meetings with the Director, Central Intullinunce
Ag?ncy, and members of his staff, o sxch.inoC'O correspondence in
October 1959 which in essence recognized that an audit of Central
Intollincnco Agency would hi'vc- to be limited to revie»vs outside the
areas of sensitive security operations on:

(1) expenditures certified by the Director under . -

Section 6 of Central Intelligence Act of 1949,

as cr.iendad.

(2) Certain activities in support of confidential
operations protected by the authority to the
Director und(;-.r 'icctlon d.

Wo agreed that to the fixtent expenditures were certified by the
Director as being of a confidential, extraordinary, or emergency
nature, such expenditures v?ere not subject to examination by the
General Accounting Office without the concurrence of tha Director.
Nonetheless, we were willing to broaden our activities at CIA ‘within
the principles laid down by the Director In his letter of October 16, '
19b9, but wo stated in cur reply dated October 21, 1959, that in tha
event it appeared aftej* a trial period our revievcs were limited to
such an extent that we could not effectively and constructively
accomplish any worthwhll© objectives we would consider v/hether or
not the audit should bv continued.

Durltr'i the ensuing 18 months we undertook to make reviews of
selected overt activities as access to the covert activities was
not m'irie available to os* In this connection, access to the activ-
ities of the Support Component in which vve could be expected to ba
most effective in our reviews was significantly limited because
covert and overt ucrivitics of this component are integrated. v;d
VKT? not able- to review sufficiently financial management, property
m-inaoemcnt. procuruopnt, end similar activities fox* any offsetivo
appraisal of. the ed-.iin'.st.rctlon or thor>-- activities. Cur access for
e revico- of the intern;:! audit program and reports was v.'ry li-itud
on.:! '.ve had no ccccrsr. vUvitevor to the work of t'j-' inc-pnetor General;
thorc^fore, vc v.-orc- not ub.l:.' to .-jporniso tho intTnal revif.v r.-cclw.!-
nlsfivs within the Agency, '’.e h-'V;- had rather co.-plotc ecc-.-r.r to the
activities of t)v? Intwllige-ncv Cerp-onr-nt, hut 'the nature of these
activities and the lach of complete ecew-ss to Ihtcrnnl rovde;. program."
and reports h-as sipnificently liiTiitcd c’ur e-ffoctivoness in this area.

In undert.eking to broaden cur ravic-.-s r.t the Central Intelligence
Agency, we rocognizeci. the neture of tho rctivltios of thlc Agency
presented problems on sufficient brc-e.dr.h of coverage <:nd rc-viuw of
detail fox' the- purpose or reeching sound conclusions, ^'/e m.-idu ove-ry
effort to bro:-..jeri cur revic.; of the setivitie i of the Agency \.itriin
the liruitations which \.‘ere pieced on us, eni wo wish to assure you our
conclusion that could not offectively acco.'piish any worth., 'hilc
audit ob:cctiv'’es at CIA on a continuing basis wos reached only eftor
considering ,3li the factors as we co'.v them. Hn.'»avnr, having in mind
your firm bo.Unf that our work should not bo discontinued wo vdll
continue cur .limited pToorem.

Vj'e note from your letter that Chairrujn Kilday’s 3v,bcor!r5.1tt'?e
will further censicisr rhr contents of our lottc-r of }'ay 16, and wo
shall bo pr-'p'.r-.'-J to m;-ot with hin and the members of his Subcorrmitt-:-?
at their convenience.

•Sincerely yours,
cArdWf'Li

Comptroller General
of the United States

COMPTROLLER GENERAL OF THE UNITED STATES
WASHINGTON U

B-133200

im 2 3 /9g(

Honorable Allen Dulles, Director
Central Intelligence Agency

Dear Wr» Dulles?

We acknc>^ledge your letter dated May 17, 1961, responding to
our letter of f'ay 16 to you relating to our reviev;s at the Central
Intclllg,rnco Agency.

iVo ackno.vlt’dge also your appreciation in our joint attc.npt to
expand the G-ineral Accounting Office activities at the Control
IntoUig:r.co Agency ?in.J yeur ccrrr.ent that the rcvl(r.vG n'.iide by our
reprfsvp.tatlvas hav'? baon helpful. As noted in cur letter of
May 16, 1961, v;e do not believe thit wo have had sufficlerit access
to permit us to make rovie. s sufficient in scope* to be helpful to
the Congress end for this reason '■.-o planned to Jiscentinae the
audit nt this tirr*.!?. Your .V: ttcr I'.otes that over the years the
viork of the C'nernl Accounting Office has bc-n most benoficinl
to you •

V.'c belioye it is appropriate here to clarify the scep-a of our
work progr«'.im preceding the reviews that t.sre unjertsken following
our exchangs of I'etters in October 1959.

Follov;ing the enactment of the Central Intelligence AO'-ncy
Act in 1949, the then Director of the Agency requested that not-
withstanding tho vc-ry broad and unusual powers granted to the
Central Intolliganc? Agency by tho act en audit of exponJituros
at the sits as pxovio’joly performed by tha General Accounting
Office ba continued. Accordingly the General Accounting Office
continued to niko audits of vouchered expenditures under tlio same
arrangements that •-ere in eff-act with the pr-adocessor C.ntral ■
Intelilgancc ^^roup. In viovi of tho provisions of Section 0 of
the Central Int.dligep.ce Agency Act no oxcoptiens were t-aken to
any -.xpsnditures but questionablo payments coning to our attention
.vGre referred to the CI.A Ccaptroliur's Office for corroctiva acticn.
Wg did not moke a substa.nclvo revi?.-# of A»gcncy poiicic-s nor of its
practices ■■''■■yJ pros and ,:;.:fdo no audit of oxp'^-ndi turns of
unvouchGred funds. _ ...

However, at the tiine of tiio enactment of CIA legislation in
1949 wo were in the process of applying the comprehensive audit
approach to the activities of riost Government agencies* Under
this audit approach our basic purpose is to review and evaluate
the manner in which the agsncy or activity under audit carries
out its financial responsibilities. V.'o construe financial re-
sponsibilities as including the expenditure of funds and the
utilization of property and personnel in furtherance only of
authorized programs or activities in an effective, efficient
and economical manner. In carrying out this type of audit we
examine the orcenization^s structure and revlev/ the established
agency policies for conformity to legislative intent and applica-
bility to agency activities. We also examine agency practices
and procedures fcllo.ved in carrying cut the agency policies and
make a selective examination of actual transactions as a manns
of appraising the application of agency practices and prcccdures.
It f.’as this kind of a rv-vic-.i that vie proposed for the Central
Intollloence in accordanco with ehatovar agro '.merit v.’e

could reach with you as to accfss to the records. Our v.'ork dur-
ing the last Id n.onlhb hos dsnonslrat-d to us that under cxictinc!
Gocurity rostrietions we do not Vicv; nccoss to rr^>ke

ccmprchc-nsivo rcvlrvs of C7A activities cn a cc-tvlinuing basis
that v.'ould be productiv:- c-f evaluations h--lp:ui to tii-:: Cofigress.

V/e deeply appreci ate, your intorcst in the possibility of
continuing cur work 'at the C- nira). lat': lligencc- Agency cn
scale end are prcparcci to discuss this pror-poct at your con-
venience, l-or the present end pending discussions ’.'-ith you r.nd
apprepriate congrcosicnal interests, w-? '.;ill continue our lueitod
program.

Sincerely yours,

TOSEPirl CA.'/iPB.5a

Coe^troiler General
of ths United States

COMPTROLt-CR GENERAL. OF THE UNITED STATES
WASHINGTON 25

B-133200

JUN 2 ^ '962

Honorable Carl Vinson, Chairnran
Coinnittee on Ar.T,aJ Services
House of Rapresentativei?

Dear Hr. Chair^risn:

By letter datocl Key 16
Chalrnan, Special Su;>r.',;;--rit
Com-iittse on /'.rr.ed Services
upon our revicv; snlec'.-^d
Agency (CIA) for the •.yerac^.
the audit of cho C-cn;;>;ul Ac
Gufficieritly tc rrl;;; rv-OT-on
activities. 5 1 : I ] ; I I r
secLirity vor-urlcv'.or' . <: *i on:
have suffice ^r.t -cco;;.,. tv r,
ing basis tart vruli I „ yvc
Congress and that i.-e '.-.'.ac.

1961, to Honcrabls Paul J. Kllday,
n’, Central Intelligence Agency,
house cf Representatives, we reported
.ctiv/.tics of Central Intelllsenco
cf cleterT.ining whether the scope cf
rautinT Office could be OKpanded
^ly co-^prchrrnsivc evaluations cf CIA
'Q stated that under the existing
tLidvlt', of Ci.i activities v;3 did not
- ^ ■’'•ah.cntivn roviewn on a continu-
f c'/aiuacicn;5 h.clpful to the

Veur latter to b.-.y Id, H5l, roc-.v-'-iRndad thnt thv'i

audit not be d iacc'.-.i: Ivuva'. at lh.:‘. ti-y.- and accordingly vc h.nve

upon us. Our furtl'cr ravii-iwr , confirm: •:) wholly to certain units
in the Intelligence Cc'-:.TC’aent , have net resulted in any change in
our views that luyler vyaistii'g security restrictiens cn our audit
of CIA activities v’a do net licvu sufficient access to effectively
acccrDplish any '.'creh-rh' l-e audit c'.) jectives et CIA cn a continuing
basis. Wc are Gub:;;i.tt'.nrc this letter sc that ycu ncy consider
further oLir views cn this uatter at this time.

The limitations placed upon our audit activities at CIA arc
severe. Fcl lowing several meetings with the Director, Central
Intelllaance Agency, ani members of his staff, we exchanged
corrcspcndenca in October 1965 which in essence recognised that an
audit of CTA would have to be livsited to reviews outside the areas
of sensitive security oOxersClcns on:

(1) ExpenUiuures certified by the Director under
Cectiou o of Central. IntoLllgencft Act of 1949,

(2) Certain activities in support of confidential
opera.tions protected by tha authority to the
Director under Section 8.

We agreed that to the extent expenditures were certified by the
Director as being of a confidential, extraordinary, or eaiergency
nature, such expenditures v;ere not subjectr to exan’ination by the
General Accounting Office without the concurrence of the Director.

The activities in support of the confidential operations enibreced
practically all of the administrative operations. l>onathele3S , we
ware willing to attempt to r?ake an audit et CIA within the principles
stated by the Director in his letter c£ October l6 , 1959, but in our
reply dated October 21, 1959, we stated that in the event it appeared
after a trial period cur reviews were United Co such an extent that
we could not effectively and constructively accomplish any worthwhile
objectives we would consider whether or not the audit should ba
continued.

Durins the ensuing 30 months we undertook to wake revic.v;.'; of
selected overt activiticiS as access to the covert activities v;a 3 not
nade ^available to us. In thin connection, access to the activitieo
of the Support Coriponent: in which v.’c could bs expected to be r.ost
effective in cur review;} vas sif;nificantly Lit-.itcd bacaviso covert
and overt* activities of tV/.B cCiwptnont are ir;tcsratcU. 'Ui wore not
able to review nuf f ic.i,c;*ifi.y finenolul r.rLp.ape-nent , property ,

contractin'*, procureceni, sii-ilar activitici; for any effective

n review of the edit prorj.ra'A and report.?, 'tais vary llrsitod

a-nci \’e h.td no acce .. ver to tae vo'r'/- ox the Inspcccor Cenar.? I *,

therofore, x:at wort ' to apprai t ntavno.l rcr.-:l.tw

\/itl'.in the Agency. liad taUhe c '^cto accc;ot; to the ectlvli' 1>,<-

of the Int-alllgenc but or r of those £.ccivitlc-s ar:d

the lack, of conyolet-' to intoirr-L l ^•=-: prog.ra.;:.s oo-i ropor’ts

has signif icantl*y liaiitcd cur ef toctlvenesf; iii this £;rca.

In undertaking to t:vaKe reviews at the Central Int-all igence Agency,
MO. recognized that the nature of the activities cf this /.yency pre-
sented problems on suff icient breadth of ceveraga and review o.f detail
for the purpose of reac:hing sound conclusions, ‘.ie have made every
effort to broaden our i-eviaw of the activities cf the Agency within
the llnitoticns which './••••jre placsd on us, ai'.d we wish to assure you
that our conclusion that w'e could not ef-factively accomplish any
v/orthuh.ilD audit objectives at CIA. or. a continuing basis T'/as reached
only after considering all the factors as we saw thea.

To obt-alii the rr.axiwun effectiveness of a General Accounting Office
audit of CIA activities, it would be necassary for our audit staff to
have nearly coniplete access to CIA activities. Ucwe.ver , we believe it
to be possible to perform reasonably co.rprebensivo rcvlcv.s of CIA

activities, such 0.3 fioancial, procuremenc, -p'cperty, auo yersonn-sl

managenent and internal review activities that are performed In
support of both sensitive and nonsansitive operations of ClA,

V7a appreciate your interest in cur work at CIA and the
expression of your views on the discontinuance of our work there
is invited. Ue are prepared to discuss these rnatters further with
ycu.

Sincerely yours,

*'0’oseph Campbell.

Cc:;iptroHer General
of the United States

EIGHTr-SEVTNTH CONGRESS

L, MCNCEU niVCRS, S.C.

ARTMUR MINSTCAO, MISS.

MELVIN PRICe. lU.

rORTtR KAHOr. JR., V*.
CkVOS DOVkC, CAUr.

■ICHARO E. LANKFORO. HO.
CEORCE HUOOLCETCN, JR.. Ak
JAMES A. arRHE. PA.

A. PAUL KITCHIR. h.C.

PRANK KOWALSKI. CONN.
SAMUEL S. STRATTON. N.Y.
jeppery cohelah, calif.

VICTOR WICKEASHAM, OKLA.
). T. RUTMERPDRe, TEX.

A. FERNOMSERH. PUERTO Rl<

JAMES C. VAN ZANOT, PA.
WILLIAM W. BATES, MASS.

ALVIN E. O’KONSKI, W S>

•OB WILSON, CALIF,
PRANK C. OSMERB,
CHARLES S. OUBSER.
FRANK J. BECKER,

ALOCANOER

DONALO D. CLANCY, CHIO
ROBERT T. STAFFORD, VT.

ROBERT W. SIRAin', CHIEF COUNSEI.

r PHILIP W. KELLEDIER. COUNSO.

FRANK M , SLATINSHEK, C91-NSCL

HOUSE OF REPRESENTATIVES
COMMITTEE ON ARMED SERVICES
- House OFFICE BUtLDING

'-sa ^VasHINGTON*25, D.C.

Jvly l8, 1962

Honorable Joseph Canpbell
The Ccenptrollter C:enercl
of the United StntGS
Washington 25, D. C.

,d/Tc

-A.AAN. tA-SACpWlW^

/

Dear 1-ir. CejnpbeU.r

I have read yoiu- letter of J;me 21, 19'02, concerning the re-
strictions on yo'.ir perforr-3,iice of an audit of the Cent.ral Intelli-
gence Agency and your opinion that as a result of these restrictions
you could not efji’ectivclj' acccmplich any vrorthvhile audit oboectives
at the Central Intelligence Agency.

I ■believe the restrictions you net with in the Central In’,;elli~
gence A.gcncy are necessary for the propoi* perf oinaance of its intelli-
gence ecti'-.'lties and should 'oe naintaiiied. Also, 1-Ir. 'IcCone has
informed ns th.at arcong the reorganizational steps he has carried out
is a major strengthenins of the ccr.ptroller anu. internal auxlit functions
in the Agency, Oonseouently, I oclieve you have met the objectives of
letter of May l3, 190I, which recorrnanded that you continue your work,
in the Agency at that tine, and since after this trial parlcd you feel
confirraed in youc opinion that it is not a worthohilG effort, I '^rill
accept your conclusion that you should -td-thdraw fron further audit
activities in tha Central Intelligence Agency.

COMPTROLLGH GENERAU-
OF THE UNITED STATES
WASHINGTON

jUL 2 o 19SZ

Vour IsLtsr dated July 13, l9o2, on further
eudic activities by the General Accounting Cffics
at Centra] Intelligence Agency is acknovletlgcd .

Your tiecftc'cancc or our concli'-sion that v/e
withdraw fiTOD rurthet audit activities at this
Agci’.cy is appreciates and ve/wiil proceed to co.;-
plete the Korh that is in process at a relatively
early date.

Sincerely,

Joseph CaupbaXi

Coinptrollar C<.»n 2 rai
of the United Statss

iionorabie Carl Vinsen
Chair-Tan, Coirmittee on
rt need S e rv- i c e s
House of Represantfitivea